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Tough Year for Tiger Cubs

Julian Robertson is mulling a "seeding" fund or a fund of hedge funds for outside investors, but his timing may not be that great. Many of his Tiger cubs — former fund managers — are struggling and are among the worst-performing hedge funds.

A report in The Wall Street
Journal that Julian Robertson is mulling a "seeding" fund or a
fund of hedge funds for outside investors is intriguing. After
all, there are clearly more Tiger Management alums  also
known as cubs  than descendents of any other hedge fund
firm. And for the past decade, Robertson has seeded several
dozen up and coming managers, taking a piece of the action in
exchange for providing rthe managers with some of his own
capital and access to his friends and firms
infrastructure.

Having the word Tiger at the beginning of your funds
name is not too bad either.

Robertsons timing, however, may not be that great.
Ironically, this year many of the Tiger cubs  especially
many of the most famous and largest  are struggling and
are among the worst-performing hedge funds in what has been a
volatile year for investors in general. They include long-short
equity funds such as Andreas Halvorsens Viking Capital,
which was down about 4.7 percent through June 30 and Lee
Ainslies Maverick Capital, off 3.3 percent through July
2.

Stephen Mandels Lone Cypress, his long-short fund, was
off about 3.6 percent while Lone Cascade, his long-only fund,
was down about 4.6 percent. Sources say Mandels longs did
pretty well on a relative basis but he was hurt by short
positions in economically sensitive stocks. Keep in mind that
Mandel is typically 40 to 60 percent net long and that his
long-short funds typically have the same long portfolio as Lone
Cascade.

One Tiger cub even scaled back his operations in the first
half. Steven Shapiros Intrepid Capital Management shut
down all of its funds except for its flagship fund after being
down 4.5 percent through April. Through May, Intrepid Enhanced,
a small fund, was down 12 percent. According to reports,
Shapiro, who covered tech stocks for Tiger for four years, came
into the year bullish on tech and large caps. He blamed his
problems this year on short sales and his stock selection in
general.

One of the worst-performing Tiger cubs is Millgate
Internationals James Lyle. The Brit global value
investor, who grew up in Hong Kong, was down 10.3 percent in
the first half of the year. Lyle, who co-founded his firm in
1997 with Martin Woodcock, was a Managing Director of Tiger
Management from 1993 to 1997.

In a letter to investors in July, Lyle lamented that June
was the funds fifth consecutive month of
underperformance. As a result, at the beginning of July, he
said he was trimming a few long positions and was in the
process of adding several short ideas. One of them was Anglo
Platinum in South Africa, on the belief that platinum demand
will fall short of market expectations due in part to the
withdrawal of the global cash for clunkers
stimulus.

Bill Hwangs Tiger Asia, one of the most successful
Tiger seeds, was up 6.2 percent in the first half of the year,
although he gave back 5.9 percent in June. The Korean native
last year was accused by Hong Kong regulators of insider
trading and market manipulation.

Dwight Anderson of Ospraie management is enjoying mixed
success since the commodities specialist liquidated his Ospraie
Fund two years ago. This year, his Ospraie Equity fund is up 8
percent (gross of fees), while Ospraie Commodities Fund is down
4 percent.

Over in London, Martin Hughes Toscafund was up less
than 1 percent. Sounds pretty stable, considering Hughes, who
was a portfolio manager at Tiger in the 1990s, was down 65
percent in 2008 and then rebounded by 43 percent last year.

Several Tiger Cubs are faring pretty well this year. Joho
Capital, the Japanese-oriented fund run by Robert Karr, was up
about 7 percent in the first half of the year. He ran
Tigers Japanese operations for three years before
launching Joho in New York City in 1996.

Perhaps the most successful Tiger cub this year is ex-seed
Christopher Burns of Goshen Investments. He is up more than 17
percent so far this year.